Five Star Bancorp's (NASDAQ:FSBC) Dividend Will Be $0.15

The board of Five Star Bancorp (NASDAQ:FSBC) has announced that it will pay a dividend on the 13th of February, with investors receiving $0.15 per share. Including this payment, the dividend yield on the stock will be 2.2%, which is a modest boost for shareholders' returns.

Check out our latest analysis for Five Star Bancorp

Five Star Bancorp's Dividend Forecasted To Be Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end.

Currently, Five Star Bancorp does not yet have a history of paying dividends out, with this being its first year doing so. While this gives us less confidence in Five Star Bancorp's long-term dividend potential, the company's payout ratio of 24%is a great sign for current shareholders, as this means that earnings greatly cover dividends.

The next 3 years are set to see EPS grow by 32.1%. Analysts forecast the future payout ratio could be 20% over the same time horizon, which is a number we think the company can maintain.

Five Star Bancorp Doesn't Have A Long Payment History

It's not possible for us to make a backward looking judgement just based on a short payment history. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

Dividend Growth May Be Hard To Come By

The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. Over the past five years, it looks as though Five Star Bancorp's EPS has declined at around 6.1% a year. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Five Star Bancorp is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We don't think Five Star Bancorp is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Five Star Bancorp that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.